John Keeley is the President and Portfolio Manager at Chicago-based Mutual Fund Company Keeley Asset Management Corporation (KAMCO). The firm, established by John Keeley in 1982, manages $6.5 billion in small-cap and mid-cap value funds, and employs a bottom-up, value-driven approach to selecting investments in companies undergoing corporate restructuring events such as spin-offs, mergers and divestitures, and any other instances in which change leads to inefficiencies or unrecognized value.

Over 90 percent of the company’s assets are deployed in small- and mid-cap companies, with each accounting for between 45-50% of the assets. Furthermore, their portfolio turnover is between 10%-15% implying a holding period approaching eight to ten years. They offer six funds, including an Alternative Value Fund. Their flagship Keeley Small Cap Value Fund with $3.8 billion in assets returned 9.3% over the past 10 years, 701 basis points ahead of the S&P 500.

Based on a review of available SEC 13-F filings, we determined that KAMCO started buying Ralcorp Holdings Inc. (RAH) since the quarter ending March 30, 1999, bought at a price between $15 and $20, when they held 165,200 shares. Since then, they have kept accumulating RAH shares, holding 0.8 million shares or 1.5% of the outstanding shares of the company. On May 4th, ConAgra Foods (NYSE:CAG) announced that they had made a proposal to acquire RAH for $86 per share in cash, netting KAMCO almost a five-fold return to their initial investment over the last eleven years.

John Keeley is a very savvy investor, and besides RAH, his initial investment in Danvers Bancorp Inc. (NASDAQ:DNBK) in the quarter ended June 2010, which was also recently acquired in January 2011 for $22, represented almost a 50% return in less than one year. Of the 436 positions in their portfolio, both RAH and DNBK represent high conviction buys as they are currently their seventh and thirteenth largest holdings. The following summarizes their other high conviction picks and pans based on the latest reported 13-F filing for the March 2011 quarter:

Penske Automotive Group (NYSE:PAG) operates 323 franchised car dealerships in the U.S. and outside the U.S., mostly in the U.K.

Credit: Historical fundamentals, including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data, including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data are believed to be accurate, but no guarantees or representations are made.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.